12 Apr 2018 | Kerstine Appunn

Interconnectors & blockages – German grid at odds with EU power market

The European Commission is pushing for a single European energy market. That demands a better-connected system, which could result in cheaper power and a more stable grid. At the centre of Europe, neighbouring eight other EU states, Germany’s role is key. But its power grid and cross-border connections aren’t up to the job – yet – meaning parts of the common market are disintegrating instead of becoming more connected. [CLARIFICATION: Adds that the European Council has set a 75% target for pan-European power trade but that this has not been confirmed yet in the legislative process]

The European Union is aiming for a “fully integrated internal energy market” (See the energy winter package of 2016 “Clean Energy for all Europeans”). That entails more and more member states being connected by cross-border power lines so electricity can be traded as freely as possible, without physical constraints.

The European Commission says more interconnections between countries can reduce the need for investment in peak generation capacity and cut generation costs, saving consumers between 12 and 40 billion euros by 2030.

In principal, European power markets are energy-only markets in which power producers are paid for the electricity they generate. In an integrated market, power producers in Denmark should be able to sell to suppliers in Italy, with transmission grid operators making it possible to transport the electricity across Europe.

The EU also aims to get more of its power from renewables, and says an integrated market can smooth out the effects of volatile wind and solar power generation on the grid, simply because the weather varies across the continent. (A recent study on behalf of the Commission even pondered the idea of connecting the European and Chinese power systems via a direct-current powerline in order to balance out renewable power supply and demand.)

But electricity can only be traded freely across borders to the extent that interconnectors have the capacity to carry it.

Integrated power market targets

The European Council has set targets for member states’ grids:

Germany has more interconnectors than any other country in Europe, but is yet to reach the 10-percent target. The German government said in 2016 that it has ten more cross-border power lines in the planning stages. Other countries are short of the targets too, particularly in East Europe, where some are further behind on interconnector capacity than Germany.

Cross-border power gains momentum

Multi Regional Coupling (MRC) is an initiative whereby 19 European countries, including Germany can already, subject to interconnector availability, trade power across borders. Cross-border day-ahead power trading is increased up to the capacity of the interconnectors available, or until a common market price is reached.

In 2015, “12 electrical neighbours” (Belgium, the Netherlands, Luxembourg, France, Germany, Austria, Switzerland, Norway, Sweden, Denmark, Poland, and the Czech Republic) agreed to “further reinforce the grids and […] not restrict the cross-border electricity exchange, even in times of electricity scarcity”.

Some countries have already reached the highest level of integration. The most prominent example is the Germany-Austria-Luxembourg common power price-bidding zone. The power price for all three countries is set at a common electricity exchange (EEX). For Germany and Austria, this means that a trader in Vienna pays as much for German power as one based in Hamburg.

However, bottlenecks in Germany’s internal north-south transmission grid are causing problems for further integration of power markets. Already, the grid cannot physically deliver the volume of power being traded. And Germany’s neighbours are complaining about destabilising loop-flows, as congestion in the German grid forces power into those of neighbouring countries, and about blockages at the borders.

The European Commission is putting pressure on the German government and the country’s transmission system operators (TSO) to fix the problem, but grid development in Germany is fraught with objections and delays.  [See Dossier “Energiewende hinges on unblocking the power grid”].

Splitting the bidding zone

Only a fraction of Germany’s interconnector capacity (ca. 30 percent) is used for international trade. Although Austrian power traders are keen to buy cheap wind power from northern Germany, congestion in the German grid means the TSOs often have to take expensive re-dispatch measures to supply the power while interconnectors lie idle.

“Germany is currently pushing its internal grid capacity problems towards the borders, and we have to do something about that,” Klaus-Dieter Borchardt, director of the internal energy market at the Directorate General for Energy of the European Commission, told the Clean Energy Wire.

To address these problems, in 2017 the European Commission threatened to split the German power market into two bidding zones. This would have pushed wholesale power prices in southern Germany up by around 11 euros per megawatt-hour (to a similar level of the Italian power price) while prices in the northern Germany remained at their current level of 33 euros per megawatt-hour (2017 average), according to Jochen Homann, head of Germany’s Federal Network Agency (Bundesnetzagentur).

The German government objected strongly, leading to a compromise in which the price-zone will instead split along the German-Austrian border. This will come into effect in autumn 2018, giving Germany some time to build the necessary north-south power connectors to alleviate the bottleneck issues. But Borchardt said that, as a last resort, the Commission could split the German market, if the infrastructure is not in place around 2025, as planned.

Germany’s 2018 coalition agreement states that the governing parties want to “adhere to the target of a single power bidding zone in Germany”.

Under construction

But Germany’s electrical neighbours are getting restless.

In March 2018, the European Commission opened an investigation after Danish power producers complained that German grid operator TenneT wasn’t giving them enough access to the cross-border power connection between the two countries, preventing them from exporting renewable power.

Poland and Czech Republic, meanwhile, have installed so called phase-shifters at their borders with Germany to prevent loop flows of northern German power meant for Bavaria and Austria flooding their networks.

Jochen Homann from the Federal Network Agency doesn’t appreciate the pressure and criticism Germany gets from its neighbours and the Commission.

“Germany’s energy transition, which is now causing us grid problems and additional costs, has pushed down prices for electricity for the whole of Europe,” Homann said at a BDEW grid conference in March. “One could also consider whether if it is fair to let Germany alone bear the costs.”

Bilaterally, Germany is increasing its cross-border power exchange capacity. TenneT is building a 516-kilometre, 1,400-megawatt (MW) undersea cable – NordLink – to transport German power to and from Norwegian hydropower storage facilities by 2020.

Grid operator Amprion in North Rhine-Westphalia and its Belgian counterpart Elia are planning the first power line direclty connecting Germany and Belgium. The 1,000-MW high-voltage direct-current line is also slated for completion in 2020.

A robust solution

Most experts agree that an interconnected European power system is the way forward, even if it means refurbishing and expanding the existing grid system.  

“Running a system with a very high share of fluctuating renewables is only possible as part of an interconnected system – the examples of Denmark and Germany show this,” Jochen Kreusel, head of the Market Innovation of the Power Grids Division at ABB, one of the world’s biggest suppliers of products and solutions for power systems and grid management software, told the Clean Energy Wire.

Borchardt of the European Commission said one of the advantages of a single European power market was that countries would not have to provide their own complete theoretical load at all times. Countries aiming to supply and consume all their own power “would be the most expensive solution imaginable,” he told the Clean Energy Wire.

Oliver Brückl, professor for electric and information technology at Eastern Bavarian Technical University Regensburg, admits that high-voltage transmission lines across the continent are at odds with the kind of power system many hope the transition to renewables will bring. “The idea is in conflict with the goal of a local, decentralised energy transition,” he told the Clean Energy Wire. “But we had such small island grids 120 years ago and people realised very quickly that this was expensive and that the system becomes more robust when there are more interconnections.”

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